The Reserve Bank of NZ has left its official cash rate unchanged at 2.50 percent.
Reserve Bank Governor Alan Bollard said New Zealand's economic outlook remained consistent with that described in its June monetary policy statement.
"New Zealand's trading partner outlook remains poor, with several euro-area economies in recession," he said in a statement.
Bollard said there remained "a limited risk" that conditions in the euro area would deteriorate significantly.
The bank continued to monitor the situation carefully, given the potential for rapid change, he said.
"Domestically, the bank continues to expect economic activity to grow modestly over the next few years," Bollard said.
"Housing market activity continues to increase as forecast, and repairs and reconstruction in Canterbury are expected to further boost the construction sector," he said.
Offsetting this, fiscal consolidation and the exchange rate were constraining demand growth, Bollard said.
"Underlying annual inflation, which recently moved below 2 percent, is expected to settle near the mid-point of the target range over the medium term," it said.
